How to Create an Invoice for Hourly Work? [5 Tips for Small Business]

Are you still charging your clients a lump sum for your services? You need to re-think your revenue model.

Billing the client a fixed amount for the freelance work might not justify hours worked. And after all,

“Time is money.” Right?

Therefore, you need to invoice for hourly work. And with the InvoiceOwl free hourly invoice template, it is easier than you think.

So, let’s learn more about the billing for the hours worked in detail.

In this blog, we will discuss the importance, use, of the ‘billable hours’ invoice template and how to use the free invoice template to create a professional invoice for a small business owner.

What is the Importance of an Hourly Invoice for Small Businesses?

The importance of an hourly invoice is immense for freelancers. When you provide services, every client has a different set of requirements and expectations.

Therefore, you can not charge every client the same amount. Your charges must vary with the scope of the service provided. So, in such scenarios, the right way is to bill clients on an hourly basis.

So let’s discuss the importance of billing hourly for a small business.

Importance of an hourly invoice for small business

  • Count the hours of hard work

    Sometimes, you would need hours of hard work to match the clients’ requirements and expectations. In such cases, you have to charge extra for the extra hours of work you had to put in.

    For example, to paint a wall, sometimes the painter has to scrap the old paint on the wall. So, to create a painting invoice that mentions the hours spent on that extra job, you need to bill for the hours worked.

  • Accessing the right amount

    When it comes to billing clients for the services provided, the one size fits all does not count. The total effort and hard work you put in are different in every project. Thus, billing clients hourly rates is the way to go.

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How to Use an Hourly Invoice?

To know how to use an hourly invoice we must ask a few basic questions which are:

When to use an hourly invoice?

An hourly invoice is mostly used to request payments for a provided service. The hourly rate is an appropriate revenue model for freelancers and small business owners. And especially the professionals like:

  • App developers
  • Handymen
  • Consulting services
  • Lawyers
  • Artists &
  • Interior designers

These service providers should use the hourly invoice for getting paid properly.

When to send your clients the hourly invoice?

To ensure getting paid properly, you should pick the right time to send the invoice.

  1. For small projects

    For small projects, you need to issue hourly invoices at the end of the job. You should send a professional invoice as soon as the job is completed from your side and to do so, you should use good accounting software and time tracking software.

  2. For large projects

    When you are working on large projects, it is a good practice to send invoices at the completion of a major task. This helps to divide a large amount into smaller amounts and maintain a good cash flow throughout the project.

How to Fill Out an Hourly Invoice Template?

While filling out an hourly invoice template you have to take care of essential elements.

So, let’s talk about all the vital elements one by one.

  1. Invoice Date

    Add the invoice date on the top of the invoice where it is easy for the client to find. This is generally the day of completion of the services.

  2. Invoice Number

    Assign a unique invoice number to every invoice you create. Make sure you use a sequential numbering system to assign the invoice number. Invoice numbering is crucial to track, sort, and manage multiple invoices.

  3. Vendor’s Business Information

    You being the seller of the product/service, fill in your business information as the vendor’s business information. Make sure you mention your business name, logo, contact information such as phone numbers, mailing address, email id, and website.

  4. Client’s Information

    Mention the client’s contact information such as business name, billing address, phone numbers, and email address. These details help in keeping sales records and invoice verification from the client’s end.

  5. Line Items

    Make sure to include line items in the invoice. This is nothing but listing all the services provided with all the details, such as item description, hourly rates, quantity (time spent), and cost of the service.

  6. Total Cost

    Mention and highlight the total cost of the invoice. Make sure you show the calculation for the applicable taxes and discounts. This makes it easy for the customer to understand.

  7. Payment Terms & Due Date

    Once you are done with the total amount, let the client know about the last date to pay the invoice. This is done by mentioning the payment terms and due date. This helps in tracking outstanding invoices.

  8. Payment Instructions

    To assist customers in paying you on time, add payment instructions. This includes the accepted payment method, currency, and beneficiary account number. This helps the client to pay you without any hassle.

  9. Payment Policy

    If your business has any terms and conditions regarding payment, this is where you need to state them. Stating policies like refunds, and late payment fees is amongst the invoicing best practices.

Why are Freelancers Turning to an Hourly Invoice Template?

Most freelancers across the globe are turning to hourly invoice templates for charging their customers. This shift is mainly due to the simplicity of the entire invoicing process.

Freelancers like to charge clients hourly rates over flat rates. This helps track the number of hours worked and bill clients for those billable hours.

Moreover, using an hourly invoice template helps to create unlimited invoices quickly and save time. Especially the hourly invoice template by InvoiceOwl.

5 Invoicing Tips for Hourly Workers

If you want your customers to pay you happily, the following invoicing tips will help you boost customer satisfaction and customer loyalty to new heights.

5 Invoicing tips for hourly work

  1. Maintain the invoice record clients-wise

    Maintaining the records client-wise gives you the entire history with the client. This helps you personalize the invoice for the client.

    Other than that, this way you would already be prepared to chase late payments from certain buyers and it is useful for tax purposes too.

  2. Number the invoices date-wise

    Numbering the invoices date-wise helps you and the tax authorities to audit any invoice and help build trust amongst the customers as a brand.

  3. Show all the calculations

    Just mentioning the grand total is not enough. You need to show all the calculations done to add and subtract the taxes and discounts respectively.

  4. Use e-Invoicing

    Using e-invoicing saves a lot of time. It takes no time in reaching the customer and the customer can pay online to make the entire process a matter of just a few minutes.

  5. Market your services

    As a small business owner, invoices are a great opportunity to market your services. You should pitch all the services you offer to let the customer know about them. It helps a lot retaining the customer.

So, are you ready to earn what you deserve?

Download an Hourly Invoice Template for Free

Here are the free invoice templates to charge your clients on an hourly basis.

Hourly Invoice Template

Word Doc of Hourly invoice template

Hourly Invoice Template

Excel of Hourly invoice template

Hourly Invoice Template

PDF of Hourly invoice template

Hourly Invoice Template

Excel of Hourly invoice template

This free invoice template is available in formats like Google Docs, Google Sheets, MS Word, MS Excel, and PDF as well.

Frequently Asked Questions

How do you calculate an hourly invoice?

To calculate an hourly invoice you need to figure out your hourly wage. To calculate the hourly wage, follow the below steps:

  • Set a target for your annual salary
  • Estimate how many hours would you work
  • Calculate your business operating expenses
  • Determine the profit margin

e.i. Total labor charge =Hourly rate total number of hours worked on the project
Now, add the applicable taxes and deduct discounts to the total labor charge to get the total amount for an hourly work invoice.


How do you bill by the hour?
To bill by the hour, you need to include a few elements in the well-designed invoice template, which are:

  • Service description
  • Total hours worked
  • Hourly work description
  • Hourly rate

By stating these criteria in the free invoice template, you can bill by the hour.


How do you number invoices?
Numbering an hourly invoice organizes the sales record and helps you sort invoices easily. The best method to number an invoice is sequential numbering. Moreover, use month and year to serialize the invoice numbers. By doing this, the invoice number can tell you about the year and the month of the invoice.


How do freelancers make invoices?
Most of the freelancers who provide services make invoices by using the free hourly invoice template and charge the clients on billable hours

Conclusion
Charging clients on billable hours has now become the industry standard.
We hope this blog has cleared most of your doubts about charging clients for hours worked by creating an hourly service invoice template.
Moreover, if you want to save hours of your time, InvoiceOwl is an invoicing app that helps to reduce the time spent on the tedious task of invoicing and utilize it on their important business operations.
If you want to learn more about the latest invoicing trends, ideas, and tips, visit our blogs regularly.

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